SB_UK

Hi - first post here :-)

My wife + myself are approaching 60 and want to relocate to France.
Mostly about the much cheaper cost of living, house price etc ... ... ...

State pension at 67 but have to survive till then and that's what this post is about.

So if we assume a 100k private pension and 100k savings (just figures to illustrate)
- please can I ask if anybody knows what the tax implications are if we become French residents and keep these 2 accounts in the UK vs bringing them to France?

My current thinking is that the annuity income on the pension and the interest on the savings are considered income in the UK so if we've less than £12.5k each then there's no tax payable in the UK.

Presumably if we're in France then we pay tax there despite the annuity income and interest income being held and paid in the UK into our UK account?

Does anybody know if we're French tax residents whether it's as simple as it is in the UK albeit with the different income tax thresholds ie 0%/10k pa Euro and then 10% up to ~30k pa Euro.

Presumably the 'Social Charge' (I ??think?? this is French National Insurance) doesn't apply in our case.

I'm trying to find as much information as possible - but most of the information on the money side that I've found is from the professional tax adviser sites and they make it all seem REALLY complicated.

I've given up trying to work out whether I can transfer the UK private pension into a French private pension (a QROPS???) - do people do this?
Are there any resources that people here know of regarding sites which are simply worded which explain what people in my situation need to know?

cyrian

Hi SB
Welcome to the forum.
You will need to applyfor a long stay visa to enter France and meet any income requirements for that visa.
If you are taking tax-free cash then this would be taxable if you are tax resident in France.
Therefore, you should take this before you are tax resident in France.
The best way to use "flexible drawdown" is to withdraw less (or equal to) the growth in the fund
For example, if you have a "moderate risk" fund which grows on average 7% a year then withdrawing 5% a year would be appropriate.
The income would be taxed in France.
You are required to complete a tax return every year in France.
This is normally per couple (household) and you declare UK State pension or Government pension as overseas income. These are not taxed in France.
Tax and pensions are a very complicated area especially if you live outwith the UK.
You need to get professional financial advice and to understand the visa requirements for moving to France.
Please be aware that France is NOT a cheap country.
Housing CAN be cheaper than in the UK but day-to-day living can be as, or more, expensive.
You would be advised to have a "Mutuelle" health insurance to cover the 30% which is not covered by the French healthcare system. This is a menu driven insurance depending on your requirements.
If you are intending buying a house in France then you may want to considering renting instead.
This is common in France and many people prefer to rent rather than buy.
Home ownership in France is not an investment as it is in the UK.
Good luck with your plans

Helen1964

“Does anybody know if we're French tax residents whether it's as simple as it is in the UK albeit with the different income tax thresholds ie 0%/10k pa Euro and then 10% up to ~30k pa Euro.”

Yes, there are tax bands just as in the UK. Google them to get the latest figures.

“Presumably the 'Social Charge' (I ??think?? this is French National Insurance) doesn't apply in our case.”

If you get an S1, you won’t be liable for prélèvements sociaux on your pension income.

I confess I do find the whole area of tax and social charges in France fiendishly complicated. Not helped by the fact that local tax offices seem to treat identical situations differently.
If you’re determined to come, and are having trouble getting your head around the tax rules, maybe use a professional who is well versed in the tax treaty between France and the UK. A former colleague uses Fiscaly to do his tax return and is happy with them.
Could save you a few headaches.

Do as Cyrian says and take your lump sum and get your annuity up and running before you move to France.

My other tip would be to open a few savings accounts in the UK before you leave. Because you will find it very difficult if not impossible to open new bank accounts, including with the same institution, once you’ve left.

Lastly, keep your house in the UK and rent it out. And rent in France for the first couple of years. In case you hate it!

SB_UK

Thanks Cyrian and Helen.
Wonderful advice! There're just a couple off other things.

My wife is a French citizen but left there many, many years ago - her first job was here and we're approaching 60.
I'm hoping that this'll ease the rules for us entering France without a Visa?
I haven't checked that though.

We're 57 now - so have 10 years before the pensions become operational.

Please can I ask a couple of follow-up questions?

Cyrian
Is there a good way of getting honest financial advice, every time I talk to a finance person - it feels a little like we're being sold to?
I have seen things like this - "State pensions are taxable in France and not the UK." - is the UK State pension taxed in France? It'll be our main source of income at 67.

Helen
We're sun lovers and so a return to the UK is not possible for us!
We're hoping to caravan down to the South of Spain for a couple of months each year when even the South of France :-) becomes unpleasant!
It has rained every day for the last several weeks bleughhhhh :-) here in Cambridge.

fidobsa

If the move is just for lower living costs you will find France is not the best choice. As mentioned, the French state health system is of the "copay" type so you need private health insurance to cover those payments.

Helen1964

It just occurred to me that if you’re not yet drawing your UK state pension you won’t be able to get an S1 and will therefore be liable to prélèvements sociaux on your foreign-source, ie non-French pensions.

So factor in that cost.

Having a French wife will make everything MUCH easier. You’ll be able to travel to France with her and not be subject to the 90-day rule.
Check the website of your proposed local prefecture to see what the procedure is for getting a residence permit as the spouse of an EU national.

SB_UK

Thanks.
The house price difference between France and the UK is incredible though! We haven't started to think about healthcare just yet. We're both healthcare people and see the move to France as a chance to lead a healthy lifestyle but you never do know what'll happen over the next 10 years... ...
Do you have any idea how much healthcare costs if we have to pay for it ourselves?

SB_UK

Thanks!
Yes - no S1 for 10 years - do you know how I'd work out what that ^^^ costs? We'll just have money from 1 pension drawdown and 1 savings account paying interest - both in the UK?
Finding the 'Social Charge' a little difficult to dissect.

Helen1964

To get a very rough idea, deduct 10% from your total gross income.
That’ll be your prélèvements sociaux sorted.

Then divide the remainder in 2 because your household consists of 2 people.
Feed the result into the tax bands (details on the internet).
Don’t forget the first €10 000 or so is tax-free.

Multiply the result by 2 to work out what the total tax bill will be for your family.

SB_UK

Thanks Helen - so at least the 10% we pay in 'Social Charges' is taken out from our gross income and so income tax is only paid after it's taken away.
So - if we're paying a 'Social Charge' does that mean that we're paying into a French state pension as well as getting health care (or at least a significant contribution of money towards healthcare costs) ?

I guess it's just to ask what the 'Social Charge' buys? If we're then paying into a pension then that'd be good - 10 years of the 43 years that're required in France, meaning a 1/4 pension - where I've heard the French state pension is 50% higher than the UK.

Our overarching goal is to become self-sufficient and to eliminate any real need for money. But what we need is (and what we can't get in the UK) a garden and sun!

cyrian

They are selling themselves. They want you to give them the income they will receive from your investment. They will charge you a fee for giving advice on your investment.
Remember you are the customer and you are in control.
They know that you can just walk out the door and never come back.
They are obliged to tell you the costs involved.
Are there set-up (initial) fees? Annual fees? Dealing fees?
Annual fees should be 1% or less (depending on the size of the investment pot)
If you buy an annuity then is your income fixed or does it increase with inflation. (probably the former)?
Does it provide an income for a spouse?
For an annuity, there will be trail commision. They may call it something else but basically, they will be paid a fee out of your annuity for a period of years.
Don't be afraid to ask directly about fees charged and negotiate.
Who do they propose as an annuity provider?
Can they get quotes from different providers?
Check the financial sites or comparison sites for the best annuity providers.
Do your homework.

SB_UK

Lovely thanks Cyrian - over the last 2 or so days I've had all of my questions answered - and will now summarise what I've learnt :-) towards helping others.

Helen1964

Hopefully someone else can confirm this but I’m pretty sure you won’t be contributing to any kind of future French pension by paying the prélèvements sociaux.
If you Google the various deductions that make up the prélèvements sociaux (there are several) you’ll see what they’re spent on.

SB_UK

Does this sound right? I'll edit it so it's correct for others to use.

Summarising retirement in France (from UK) at the age of 57 with a wife that is French.

1. Visa requirements and Income requirements (we won’t have as much as the SMIC x 2 as an income) hopefully won’t apply since my wife is French.

2. If we’re above 55 then we can apply for a 25% tax free lump from our pension whilst in the UK but take in the UK to avoid paying tax in eg France.

3. It’s not great to take an annuity (an income from our pension pot) when this 'young' as the payout will be far less. However it’s very difficult indeed to organise an annuity starting when in a country other than the UK (where the annuity is held) – due to ... ... ...

4. It’s possible to obtain a 'pension drawdown' (which is the term financial people use to mean taking the cash out from our pension pot) but every penny that’s taken after the 25% tax-free sum is taxed as income tax in the place we’re living (for >183 days each year). No additional charge is levied for each draw down ie the pension pot people don't charge 12 times if we draw down monthly.

5. We can keep our UK savings in the UK or transfer it to France and there're lots of Internet banks which have a 100k Euro protection in case of financial system meltdown similar to the £85k limit in the UK. There's a form we need to fill out to ensure that we aren't taxed in the UK and we have to fill a form out in France to declare the source and income we're getting from the UK in order to pay tax on it in France. So France needs to know what our pension pot and savings pot are as well as how much income we're getting from them.

6. France has 3 tax-free places to place cash – one’s called the Livret A – and I think we can place $40k Euros in their total, not per year.

7. We will pay income tax in our country of residence (so France in the case I’m describing) on the interest from any savings we have.

8. If the 'pension drawdown' + interest on our savings = £10k as an example – then we have to pay a Social charge which means that 70% of our medical expenses are covered – so let’s assume the £10k drops to £9k.
We have to pay into a Mutuelle if we want the other 30% of our medical costs to be paid.

9. We then pay tax on that £9k and so there’s none payable as it’s in the 0% bracket in France.

10. When we’re 67 we can get form S1 and then no longer need to pay Social charges as Healthcare is covered by S1.

11. Upon hitting 67, the UK pension will be counted as income in France and so using the above example – we have £10k incoming + £10k from a UK State pension so a portion of that £20k will be subject to tax as it’s above the 0% tax bracket in France.

12. These are the taxes we have to pay:
a-Taxe foncière
paid as owner of the house - the smaller the house the cheaper this tax
b-Taxe d'habitation
paid if live in a house - this is being phased out?
c-French Income Tax
Covered above - payable
d-UK Income Tax
Covered above - not payable after filling out a form
e-French social charges
Covered above
f-French Wealth Tax
Covered below

--- Tax brackets ---

• Up to €10,777: 0% tax rate.
• From €10,778 to €27,478: 11% tax rate.
• From €27,479 to €78,570: 30% tax rate.

The only bits I don’t understand are what we get for the Social Charges we pay?
-- If we enter France at 57 and pay Social Charges to 67 – does that mean a ¼ eligibility to the French state pension?
-- If there are any super simple schemes like the ISA in France that permit tax-free housing of cash like a Cash ISA?
-- Is the wealth tax based on the cost of the house in France + savings pot + pension pot
-- We're thinking of getting a cheap hut in the middle of nowhere in Spain for when it's cold in France - this'd be classed as a second home I guess - is this possible without being pounded by the taxman as we'll not bother if it's too expensive. We're going after 2 off-grid houses to minimize all of the many other charges that're (water, elec, gas, phone, internet) required beyond all of the taxes.

EuroTrash

You have misunderstood "social charges". They are essentially a tax by another name. In fact "social charges" basically consist of two separate taxes, CSG (contibution sociale généralisée) which funds the national healthcare infrastructure plus things like funding certain social benefits for the less well off, ensuring those living in the dom toms aren't penalised by higher electricity supply tarifs, and various other random social provisions.; and CRDS, "contribution au remboursement de la dette sociale) which goes towards paying of France's social security debt. Neither counts towards your personal healthcare, pension, or anything like that. All you get is from a warm glow in your heart from knowing you've contributed to French society and helped reduce France's debt.
Short explanation:
"La contribution sociale généralisée (CSG) et la contribution au remboursement de la dette sociale (CRDS) sont des taxes destinées à financer la protection sociale en France et à résorber l'endettement de la sécurité sociale."
(https://www.economie.gouv.fr/particu...neralisee-csg#)
Longer explanation:
https://www.urssaf.fr/portail/home/i...ette%20sociale.

What entitles folks to healthcare and potentially puts something in their pension pot are social *contributions*, usually referred to as "cotisations". These are an entirely different kettle of fish that workers pay in addition to their CSG and CRDS, whereas inactifs only pay the CSG/CRDS elements..